Bloomberg has learned that the government of India is working on a new proposal that would apply a service tax on cryptocurrency transactions subject to goods and services tax (GST).
Citing anonymous sources, the report suggests that the government’s Central Board of Indirect Taxes wants to apply the 18% tax on exchange operations, which it would view as “intangible goods.”
Intangible goods would be on par with other software systems. The authority also suggests that separate laws would be introduced to deal with the usage of cryptocurrencies for criminal activities. “Purchase or sale of cryptocurrencies should be considered as supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services,” the publication reports in a summary.
India has not issued regulations on cryptocurrency, despite efforts by the Reserve Bank of India's recent restrictions for persons or companies dealing with cryptocurrency or trading platforms.
If the new GST tax rule gets approved, this may begin the process legitimising the industry. “If buyers and sellers are in India, the transaction would be treated as a supply of software and the buyer’s location will be the place of supply,” Bloomberg continues, noting elsewhere that: “Transactions beyond the Indian territory will be liable for integrated GST, and would be considered as import or export of goods. IGST will be levied on cross-border supplies.”